BY Gift Kugara
Troubled Zimbabwe reduced the cost it charges on borrowing only two months after raising it, a move aimed at encouraging economic activity following a string of unpleasant performances.
The Reserve Bank of Zimbabwe trimmed the interest rate to 35 % from 70% on Monday. In August this year the central bank raised its overnight borrowing rate from 50% to 70% after a surge in inflation and a steep fall in the domestic currency.
The authorities last week also added the supply of new notes, worth about ZWL 30 million (about $2 million on the official exchange into the financial system hoping to alleviate liquidity concerns.
In a statement, the RBZ’s Monetary Policy Committee (MPC) Chairman, Dr. John Mangudya said the meeting agreed to find measures to stimulate growth within the productive sectors of the economy.
“The committee emphasised the need for the bank to put in place measures to fund the productive sectors of the economy by redirecting excess liquidity in the financial system.
To this end, the bank policy rate, currently at 70 percent, requires review. The committee resolved to revise the bank policy rate from 70 percent to 35 percent, with effect from November 20. This position would be further reviewed at future committee meetings,” said Dr. Mangudya.- TheZimbabwenewslive